Transform coding has been chosen for still image compression in the Joint Photographic Experts Group (JPEG) standard. Although transform coding performs superior to many other image compression methods and has fast algorithms for implementation, it is limited by a blocking effect at low bit rates. The blocking effect is inherent in all nonoverlapping transforms. This paper presents a technique for reducing blocking while remaining compatible with the JPEG standard. Simulations show that the system results in subjective performance improvements, sacrificing only a marginal increase in bit rate.